Is Half of Your Marketing Budget Really Going Down the Drain?

Should marketers spend time trying to figure out what part of their budgets might be going down the tubes, or is it worth the effort?

Most marketers have heard the old saw claiming 50% of marketing budgets are wasted. The problem is we don’t know which 50% is supposedly disappearing into the vapors. In the age of big data, digital fingerprinting, super cookies that track users across their online journeys and a host of other tools used to feed AI-driven marketing models, it would be safe to assume we could use that data to determine the accuracy of the claim of budget wasting. 

But, you know what they say about assuming. And the truth is, a determined marketing department can track an individual’s journey from prospect to paying customer down to the handful of digital ads that move them to buy. But it takes a lot of work and may not be worth the effort, said Forrester Principal Analyst Tina Moffett.

“We were getting down to a point about seven years ago, where we were looking at an ad and being like, ‘OK, well, the cookie can tell us the placement of the call to action and the creative across different variations, what level of impact those components had on a person’s ability to convert.’ I mean, that is really granular level insights,” she said. 

Today, however, this type of individual-level tracking is much harder to accomplish. Google, Meta, Amazon and many other big tech firms that hold much of the world’s data concerning online buying behavior and preferences no longer share that data. Nor do they allow third-party advertisers to operate within their walled gardens. These walled gardens are also very common today among retailers and large consumer packaged goods (CPG) companies.

Add this to the raft of privacy regulations that are popping up across the United States and around the globe, and it’s clear that data about an individual’s online (and offline) activities is becoming more difficult to obtain and, legally, harder to use. 

Additionally, mega-companies like Apple are using trust as a branding issue, which has led the company to severely limit app developers’ abilities to hoover up user data to use any way they see fit. 

From a strategic point of view, however, measuring paid media and owned marketing programs and understanding the efficacy of email — direct mail is not an issue because marketers are using aggregated cost data and conversion data to build campaign efficacy models — it’s the tactical level marketing dollars that are, once again, getting harder to track, said Moffett.

Marketing Data Challenges Persist Even With so Many Tools

Intuitively, it makes sense that the more data you have about an individual customer journey, the more accurately you should be able to market to similar individuals in the future. But again, that is not necessarily the case.

“The reality is that it depends on how and why the marketing dollar was spent in the first place,” said Tim DaRosa, CMO of managed infrastructure provider Zadara. “For example, if a modern SaaS marketer is investing dollars to increase awareness of her brand across a specific region, then, even with today’s incredible tools and technologies, there is no accurate way of measuring the direct impact on the business.”

Individual customers are also harder to track because they often research a brand, product or service using multiple sources. Marketers may not be aware of or able to track many of these sources, such as chatrooms, online forums and in-person conversations. 

Given all tools for tracking demand generation activities — paid search, email, social media, trade shows, gated content downloads, etc. — that are at the modern marketer’s disposal, monitoring the most effective channel, not the individual, is more important anyway, said DaRosa. 

“If done correctly, each channel should then have a clear cost-of-acquisition metric associated with it,” he said. “I would argue that if a CMO today could not articulate the marketing ROI of her primary lead generations channels, there are issues with the way marketing investments are being made for the company.”

Related Article: How to Find Content Marketing Success Through Any Budget 

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